Renewed interest in base metals greets 1990s

Long-awaited signs of a significant renewal in the amount of base metal exploration activity in Canada have appeared just as a new decade gets under way.

Senior and junior mining companies alike are preparing to spend more money looking for polymetallic deposits in 1990 than they did a year ago.

Mining analysts note that while base metal prices have probably peaked, they will likely settle at levels attractive for all but the highest-cost producers in 1990 and beyond.

The discovery record for new base metal deposits in the 1980s was unusually meagre, except for the 11th-hour discovery of a large new copper-zinc-gold deposit by Aur Resources (TSE) and Societe Miniere Louvem (TSE) near Val d’Or, Que.

That discovery is sure to provide plenty of news in the year ahead, as diamond drill rigs continue to probe its dimensions and outer limits at depths below 2,000 ft.

For several years it seems industry watchers had been waiting for any sign that base metal exploration might be picking up.

The last decade was spent focusing mainly on gold, and a resurgence in base metal exploration activity has been needed, not only to revive the junior mining and exploration sector, but also to replace the country’s diminishing metal reserves.

But which companies or projects are likely to yield the most significant new polymetallic discoveries and developments of the 1990s?

The answer to that question is sure to keep mining analysts and industry watchers guessing as the new decade unfolds.

Below are some of the candidates for headline makers in the base metal industry in 1990.

Companies exploring ground near the Aur-Louvem find could come up winners if their drills are successful in making new discoveries next year. A few of the players conducting programs along strike from the Aur find include Wrightbar Mines (ME) on its Bourlamaque Twp. property, and partners Aurizon Mines (TSE) and Ezekiel Explorations (VSE) on their Connell Corner property in Louvicourt Twp.

VSM Exploration (ME) and partner Serem Quebec have increased reserves on their Grevet M zinc-copper-silver property to 6.1 million tonnes grading 8.65% zinc, 0.48% copper and 33.93 grams silver per tonne. The companies are continuing with drilling to outline more reserves on the property in Grevet Twp., near Matagami, Que. Placer Dome (TSE) is a significant shareholder in VSM.

Meanwhile, partners Minnova (TSE) and Audrey Resources (TSE) have built up probable ore reserves in 1100 lens at the Mobrun polymetallic mine in Quebec to 10.4 million tonnes grading 0.76% copper, 5.43% zinc, 37.4 g silver and 1.35 g gold. Minnova, 50.5% owned by parent company Kerr Addison Mines (TSE), is planning an active year in base and precious metals exploration, as well as growth through acquisitions.

In Saskatchewan, another closely watched base metals project is at Hanson Lake, 65 km west of Flin Flon. The project is being explored by operator Cameco which owns 67.1% and Trimin Resources (TSE) with the remaining 32.9% interest. Drill-indicated reserves in lens 2 of the McIlvenna Bay zone are estimated at 7 million tonnes grading 1.1% copper, 6.5% zinc 28 grams silver, and 0.54 grams gold. These results are in addition to 400,000 tonnes of 2.5% zinc, and 1.7% copper in lens 1, and 40,000 tonnes of 8.1% zinc and 1.6% copper in lens 3. An environmental impact study is under way and is scheduled for completion in the summer of 1990.

In British Columbia, the Tulsequah Chief polymetallic deposit, owned 60/40 by Cominco (TSE) and Redfern Resources (VSE), had its geological reserves upgraded recently to 5.3 million tonnes grading 1.6% copper and 7.03% zinc, along with significant silver and gold values.

Some other major developments in British Columbia include the Mt. Milligan copper-gold deposit of Continental Gold (VSE) and BP Resources Canada. This huge project is expected to provide interesting news in the years ahead. The Mt. Milligan deposit is currently estimated to contain indicated reserves of 100 million tonnes grading 0.3% Cu and 0.90 g gold.

Last year, cash-rich Rio Algom (TSE) picked up an 8.6% toehold stake in Continental Gold.

Elsewhere, the Kerr copper-gold project near Stewart, B.C., was gobbled up last year by Placer Dome (TSE) from Sulphurets Gold and Western Canadian Mining. That deposit hosts reserves in excess of 60 million tonnes grading 0.86% copper and 0.34 gram gold. Meanwhile, the Mt. Polley copper-gold deposit, owned by Imperial Metals (TSE) and Corona (TSE), is the focus of a feasibility study expected in March, 1990. Drill-indicated reserves for Mt. Polley were estimated recently at 48 million tonnes grading 0.44% copper and 0.6 gram gold.

Another big copper resource awaiting development is the remote mountaintop Windy Craggy deposit owned by Geddes Resources (TSE). Both Cominco and Northgate Exploration are major shareholders in Geddes. At a cutoff grade of 1.5% copper, 87.6 million tonnes grading 1.96% copper are classed as probable reserves.

With more big new finds from companies such as Aur Resources, the junior sector could kick off what may become a new era in base metal exploration for the 1990s.

Vibrant and entrepreneurial junior companies have traditionally been associated with notable exploration successes leading to the development of new mines in Canada.

Analysts point out that a significant quantity of copper must be found in Central and Eastern Canada to provide feed for the copper smelters situated east of the Saskatchewan-Manitoba border. New discoveries are needed to avert smelters being forced to close. Those sufficiently close to tidewater could become increasingly dependent on imported copper concentrates, say analysts.

Considering the fact that it takes an average of six years to turn a discovery into a mine, a renewal in base metal exploration is a welcome trend to see as the 1990s begins. Forecast LME cash prices 1990 (US cents/lb.) AverageRange copper 7060-90 zinc 6455-80 lead 2520-28 nickel 375350-450 aluminum 7060-90 Source: Shearson